Government News
Affordable Care Act Has Benefits for People With Psychiatric Illness
Psychiatric News
Volume 47 Number 15 page 1a-27

Good for patients.

That’s how APA leaders describe the Patient Protection and Affordable Care Act (ACA), the landmark health care reform law.

The U.S. Supreme Court’s June ruling upholding the constitutionality of the health reform law (Psychiatric News, July 20) means the law’s reform provisions will continue to roll out, affecting the care of millions of Americans. (See Covering Chronic Mental Illness Won’t Disadvantage Insurers for information on health exchanges.) In July, as they have done previously, House Republicans voted to repeal the law, but the repeal is unlikely to pass the Senate, and President Obama has said he will veto such legislation.

APA leaders who spoke with Psychiatric News agreed that the new law is a landmark advance for psychiatric patients because of its overarching insurance reforms intended to benefit all Americans and because of specific provisions targeting research and treatment of mental illness. The AMA also supports the law.

“The ACA provides important protections and benefits to patients, both in its general insurance provisions and parts of the law that specifically reference coverage of treatment of mental illness, including substance use disorders,” Dilip Jeste, M.D., president of APA, told Psychiatric News.

Jeste said protections that are particularly important to psychiatric patients include the prohibition on preexisting condition exclusions and other discrimination based on health status—including a history of mental illness or substance abuse— and the prohibition on lifetime and annual dollar limits starting in 2014. Additionally, dependent coverage provisions in the law already allow unmarried individuals to remain on their parents’ insurance plan until age 26—something that may be of particular importance for adolescents experiencing the first symptoms of serious and persistent mental illness, Jeste said.


Jeste also emphasized that core benefits defined by the law include parity for mental illness and substance abuse. “Coverage of mental illness and substance use disorders is required as part of the core benefits package that must be offered in the state insurance exchanges established by the law,” he said. “When fully phased in, coverage must be at parity with other medical and surgical benefits for all plans sold in the exchanges.

“This is real parity, with teeth,” Jeste said. “Our patients can’t be denied coverage because they have had a psychiatric illness. And they can’t be dropped by their insurance company for getting treatment. Nor will they have to worry that their insurance benefits will run out when they are most in need of treatment.”

Jeste noted also that subsidies for those with lower incomes will help make insurance purchased in the state exchanges more affordable. This in turn will help to alleviate a longstanding dilemma faced by poor or low-income individuals with mental illness in the past: whether to seek employment that is likely to have no or inadequate insurance or to forego employment to obtain health insurance through public assistance.

In addition to these sweeping reform provisions that will benefit all Americans, there are several elements in the law that specifically target research on and treatment of mental illnesses. And there are also some provisions related to physician payment, some of which remain controversial (see Reform Law Benefits Psychiatric Patients).


The law’s expansion of Medicaid— assuming states opt to expand their rolls in accordance with the law’s incentives—will likely do the most to dramatically increase the number of individuals with psychiatric illness receiving publically financed insurance. According to the law, states that expand their Medicaid rolls to include those with incomes up to 133 percent of the federal poverty level will receive 100 percent federal matching funds for the first three years to cover newly enrolled individuals who were previously uninsured. “Expanded Medicaid coverage up to 133 percent of the federal poverty level will provide a major pathway to insurance for the poor and near poor,” Jeste said.

But Howard Goldman, M.D., editor of Psychiatric Services and author of several landmark studies on the effects of parity on overall costs, noted that the Supreme Court did not uphold the provision in the law requiring states to expand their Medicaid rolls or lose the rest of their preexisting Medicaid funding (Psychiatric News, July 20). Goldman is a professor of psychiatry at the University of Maryland School of Medicine.

Still, Goldman said he believes most states will opt into the expansion, enticed by the 100 percent federal payment for the first three years. After the first three years, states will be required to begin matching expenditures, but Goldman said the state match is likely to be capped at just 10 percent of overall expenditures.

“A few states may prefer to pass on the expansion so as to avoid the state matching expenditure requirements [after the first three years],” Goldman told Psychiatric News.

For states that do opt to expand their Medicaid rolls, Goldman said it will prove to be particularly beneficial for individuals who need insurance coverage but are not disabled and thus do not qualify for Supplemental Security Income (SSI).

“This will be of special importance for the newly emerging programs for treating first-episode psychosis,” he told Psychiatric News. “These programs typically treat younger individuals, some of whom will be able to remain on parental insurance until age 26 and others who will now qualify for Medicaid before they become disabled. This holds particular promise if these first-episode treatment programs can prevent the disability that led people to a life on the SSI or Social Security Disability Insurance rolls.”

In a September 2010 article in Schizophrenia Bulletin titled “Will Health Insurance Reform in the United States Help People With Schizophrenia?,” Goldman expanded on the theme, noting that health insurance reform means more than improved mental health benefits— it means improved health benefits more broadly for individuals with mental illness.

“People with schizophrenia have significant general medical problems and increased morbidity and mortality from those conditions,” he wrote. “Now instead of depending on the public mental health system and charity care for providing general medical care, individuals with schizophrenia will have health insurance coverage for their health care needs.… This may be particularly important as clinical care moves to early detection and intervention, including secondary prevention of psychosis in at-risk individuals with attenuated psychotic symptoms.” inline-graphic-1.gif

“Will Health Insurance Reform in the United States Help People With Schizophrenia?” is posted at www.schizophreniabulletin.oxfordjournals.org/content/36/5/893.full.


The Patient Protection and Affordable Care Act (ACA) includes the following major reforms that will benefit patients with psychiatric illness:

  • Expanded private insurance:  In 2010, the law established high-risk pools to cover adults with preexisting conditions. Beginning in 2014, health insurance exchanges will open in each state, and individuals and small employers will be able to shop for standardized health packages. Also beginning in 2014, companies with 50 or more employees must offer coverage to employees or pay a penalty. Health plans in the state exchanges will be required to offer mental health and substance abuse treatment at parity with general medical care.

  • No lifetime or annual limits:  Beginning in 2014, the law prohibits plans from establishing lifetime and annual dollar limits on essential benefits.

  • Expanded public insurance through expansion of Medicaid:  Beginning in 2014 states that opt to expand Medicaid eligibility to those with incomes to 133 percent of the federal poverty level will receive 100 percent federal funding for newly eligible Medicaid recipients for three years. After the first three years, states will assume a progressively higher percentage of total expenditures, expected to be capped at 10 percent.

The ACA also includes provisions that are directly relevant to psychiatry and treatment of specific mental illnesses. These include the following:

  • Support, education, and research for postpartum depression:  Provides support services to women suffering from postpartum depression and support for research into causes of and treatments for postpartum depression and psychosis.

  • Centers of excellence for depression:  Directs the administrator of the Substance Abuse and Mental Health Services Administration to award grants to centers of excellence in the treatment of depressive disorders.

  • Medicaid Emergency Psychiatric Demonstration Project:  Established a three-year Medicaid demonstration project, recently begun, in which participating states are required to reimburse certain “institutions for mental disease (IMDs)” for emergency inpatient psychiatric care provided to Medicaid recipients aged 21 to 64 who are experiencing a psychiatric emergency.

  • Community mental health centers:  Increases funding for community mental health centers.

  • Co-locating primary and specialty care in community-based mental health settings:  Authorizes $50 million in grants for coordinated and integrated services through the co-location of primary and specialty care in community-based mental health settings.

  • Elimination of exclusion of coverage of certain drugs under Medicaid:  Beginning with drugs dispensed on January 1, 2014, smoking-cessation drugs, barbiturates, and benzodiazepines will be removed from Medicaid’s excludable drug list.

Finally there are important provisions in the ACA affecting physician reimbursement, some of which are controversial. These include the following:

  • Geographic payment differentials:  Reestablished, as of 2010, a national average “floor” on Medicare’s geographic payment adjustment for physician work that will benefit physicians, including psychiatrists, in rural and low-cost areas.

  • Medicare shared savings program:  Rewards accountable care organizations (ACOs) that take responsibility for the costs and quality of care over time, beginning this year.

  • Physician Quality Reporting Initiative:  Requires all physicians participating in Medicare to report on performance measures. Starting in 2015 physicians who fail to report successfully will be penalized 1.5 percent. APA opposes the penalty and successfully lobbied to have it pushed from 2013 to 2015.

  • Independent Payment Advisory Board (IPAB):  Recommends changes in Medicare payment policy. If spending exceeds a target, IPAB will recommend reductions to achieve the target; Congress must intervene to stop such reductions. APA opposes the IPAB.

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